These regulations and guidelines are necessitated due to the fact that the Central Bank of Nigeria has not in most times had the entire capacity to cater for the level of demand of the foreign exchange, hence, the parallel market has always flourished.
The Central Bank of Nigeria Regulated Market: The CBN has been immensely influential to the foreign exchange market through its authority over money supply and periodic price and non-price regulations. As a source of foreign exchange, the CBN finances three major areas; Settlement of matured letters of Credit that have been opened for importation; Importation of Petroleum Products; and Import of raw materials. The exchange rate or price is usually determined by the CBN and not market forces.
The rates in this market are subject to agreement of the parties. Also, the CBN, being the apex bank, had, at some point, issued policies on this source, geared towards increasing the inflow of foreign currency into Nigeria, this source is propelled by businesses or individuals from the diaspora.